An appeal of the decision was then taken to the NSW Land and Environment Court, with BVSC also moving to place the building on the NSW heritage list.

BVSC Mayor, Bill Taylor, says the court ordered Great Southern Developments and council into mediation sessions to try and broker a deal.

"The applicant and council have been sitting down and trying to find a way through that development which would have allowed the supermarket to be built, but to retain the facade," he says.

Great Southern Developments offered to retain the 1950's facade of the pub, but still build the supermarket on the site.

"We were left with a situation there that if the applicant were to do that, we would have foregone any car parking contributions, and they add-up to almost $500,000," says Councillor Taylor.

"While council over this period of months [have] been trying to retain [the hotel] (by first refusing the application, and then trying to negotiate a resolution), we got to a point where our strong legal advice [and] strong planning advice was that we were going to lose the appeal.

"One of the results of that could have been that we end up with the 1950's facade and foregone $500,000 in car parking contributions."

Cr Taylor says it was a difficult situation for councillors to resolve.

"The majority of council yesterday effectively said, 'go back to the commissioner and accept the staff recommendation from the start'.

"Depending on what the applicant wants to do with that consent, effectively the court will adopt the staff recommendation; that's what we anticipate."

Cr Taylor says councillors had to consider the benefits of pursuing the case.

"Councillors agonised over this one and I believe we did everything we could reasonably do to retain the Australasia Hotel's frontage.

"At the end of the day, we had to look at the big picture, the $500,000 of car parking contributions, [and] the fact that there will be a new development in Eden," he says.

"We can't spend more ratepayer's money, [and] more staff time facing what we're advised as something we were going to lose anyway."